What's Next After TWICE and Stray Kids? JYP Entertainment's Concerns Deepen

Contract Renewals and Military Service Uncertainty... NMIXX and KickFlip Take on Bigger Roles

JYP Entertainment's schedule has become more complicated. Analysts say that with TWICE's contract renewals coinciding with uncertainty over Stray Kids' military service, the pace at which its younger groups grow has become more important.

On November 4, Samsung Securities cut its target price for JYP Entertainment by 19.4% to 50,000 won against this backdrop. The previous day's closing price was 37,400 won. It maintained its "Buy" rating. The brokerage said the outlook for the company's medium- to long-term earnings had become less certain due to changes in the activities of its established core IP (intellectual property), while growth among its younger IPs was not yet sufficient to offset the resulting gap.

First, there is TWICE. As the group approaches its second contract-renewal period, Jeongyeon, Chaeyoung, and Jihyo have left JYP to pursue individual activities. The remaining members plan to continue group activities, but individual activities may take priority for the time being, making it difficult to predict whether the full group will be active next year, the brokerage said.

Stray Kids remains a strong pillar of support. Its fourth world tour, "Run It," which began in July, is underway. The group is expected to expand its tour to the Americas and Europe next year and contribute more to earnings than on its previous tour, which was smaller in scale. However, with some members approaching the time for military enlistment, the extent of any earnings gap after the end of next year could vary depending on the group's activity strategy, analysts said.

The company's reliance on its leading artists is also evident in album sales. Of the approximately 5.12 million albums sold by its artists in the third quarter of this year, Stray Kids accounted for approximately 4.09 million, or 80%.

This has increased the importance of younger groups such as NMIXX, NEXZ, and KickFlip. They are growing their fandoms, but their contribution to earnings is not yet large enough to fill the gap left by the leading groups, the brokerage said.

Third-quarter results are expected to edge down. Samsung Securities forecast revenue of 223.2 billion won and operating profit of 39.9 billion won, down 4.1% and 2.3%, respectively, from the same period a year earlier. Operating profit is about 6.6% below the market consensus of 42.7 billion won. Analysts expect it will be difficult to exceed last year's third-quarter results, even with new releases and tours continuing.

Choi Minha, an analyst at Samsung Securities, said JYP Entertainment was facing a new test of its growth. "This is a time when expanding the contribution of next-generation IPs to growth is becoming important," she said. "The pace of growth among younger IPs will be key."

This content was produced with the assistance of AI translation services.